Forbes: As Supreme Court weighs landmark sports betting case, push to curb underground market intensifies

Dec 11, 2017
In The News

If a prominent bookmaker fielded a request to set a line on whether the Supreme Court will rule in favor of New Jersey in the landmark sports gambling case before the nation's top court, the sportsbook may opt instead to keep the wager off the board.

Following Monday's hearing in Washington D.C., numerous gaming experts insisted that they are not in the business of predicting the decision making process of the justices, as the Court heard arguments on whether U.S. states can legalize sports betting. At issue in Christie v. NCAA, is whether the Professional and Amateur Sports Protection Act of 1992, a 25-year old federal law, infringes on states' rights. In 2014, New Jersey governor Chris Christie signed a bill authorizing sports gambling in casinos and racetracks statewide, partially repealing the Garden State's ban on betting on sports.

Gaming advocates, however, have been more vocal in discussing how a victory by Christie could lead to widespread reform of sports gambling throughout the nation, while curtailing the influence of an illegal, underground market estimated at $150 billion annually, according to the American Gaming Association. Ahead of the hearing 15 states introduced sports gambling bills in 2017, spanning as far as New York to Hawaii. Four of the states, Pennsylvania, Connecticut, Mississippi and Montana, have already enacted legislation that could pave the way for in-state betting on sports if the law, more commonly known as PASPA, is deemed unconstitutional.

Already, two policymakers in the House of Representatives have taken action.  On Dec. 4, the same day the Court heard oral arguments, Rep. Dina Titus (D - Nevada) sent a letter to the House Energy and Commerce Committee requesting a hearing on sports betting. Days later, Rep. Frank Pallone Jr. (D - New Jersey) introduced a comprehensive bill, the Gaming Accountability and Modernization Enhancement Act, or GAME Act, which could provide states with the legal framework to adopt sports betting at their discretion, if appropriate consumer protections are established.

Without a federal regulatory scheme in place, the possibility exists for a patchwork, state-by-state eruption of sports gambling, said Nevada Gaming Control Board chairman A.G. Burnett, in areas that may lack the proper safeguards for customers. Nevada's model contains an onerous, intrusive application and investigative process before licensing a casino to accept sports bets, along with continuing audits and enforcement requirements once the company is approved, he added. The strict procedures prompted Titus to describe Nevada as the "gold standard," for other states to emulate when designing a regulatory model for sports gambling.  

"Most of the jurisdictions in the United States that have gaming already have models that are similar to Nevada," Burnett said. "There's concern that some states or tribal jurisdictions could adopt their own form of regulation that could be vastly different," Burnett said.

For legislators, attorneys and lobbyists alike, patron protection ranks as their top priority as the Court weighs its decision in the coming weeks. Since the committee held a hearing at Pallone's request 19 months ago to examine the intersection between fantasy sports and gambling, the New Jersey congressman has conducted an extensive review of federal gaming statutes and their impact on both the legal and underground betting markets. The system, according to Pallone's study, has been largely ineffective as illegal gambling operations that skirt state and federal laws remain widespread.

The sentiments are echoed by American Gaming Association President and CEO Geoff Freeman, who has taken issue with several aspects of PASPA, namely in its inability to restrain the wave of criminal activity associated with offshore gambling. While a host of casinos on the Las Vegas strip have taken steps to cater to millennial gamblers by offering mobile sports wagering platforms in recent years, state laws limit customers from placing bets outside of Nevada. On the contrary, experienced sports bettors returning home from a vacation to Las Vegas can still access apps from websites such as Bovada and BetOnline, which are domiciled outside the U.S.

"The truth is that the customer can pop open their phone, go on their Bovada site and place a bet as fast as they can order an Uber," Freeman said. "If our goal is to shut down the illegal market, then we need policymakers to understand what makes that market tick and what can make the legal market an effective counter to that illegal opportunity."